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Frito-Lay defends its snack turf against all comers, salty or sweet

When it comes to competing against the army of marketers vying for a piece of the $90 billion snack category, Frito-Lay is hardly just letting the chips fall where they may.

With so many food marketers shrinking their cookies, crackers and candy to mini-bites, Frito finds itself competing in a "macrosnack" category rather than just against other chip makers.

Several initiatives-including an umbrella campaign for the growing family of Lay's products, new advertising for Restaurant Style Tostitos and Nacho Cheesier Doritos and the launch of a female-targeted line of beef snacks, Oberto Crisps-all signal the $10 billion snack giant's strong intention to protect its turf.

Under the leadership of Chairman-CEO Irene Rosenfeld, who joined Pepsico last September from Kraft Foods, Frito-Lay has vowed to up ad spending this year by 50% to roughly $150 million, concentrating most heavily on pushing its core four mega brands, Lay's, Doritos, Tostitos and Cheetos.

After listening to Ms. Rosenfeld's presentation at an analyst conference in February, Prudential Securities analyst Jeff Kanter offered that "few doubted that Ms. Rosenfeld can `make a difference' at Frito" as she's promised to do, in large part because of her understanding of how to compete against those outside the core salty-snack category, he said.

FIRST-QUARTER GAINS

UBS Warburg analyst Caroline Levy said that "[Frito] has been able to activate very large brands with product and package innovation and-when you throw in the greater expenditures on TV this year-I expect them to be even more effective."

The tactical strategy includes product and packaging changes as well as new ad campaigns for Frito's top four. Those efforts began last year with Lay's and have already driven first-quarter gains in the double digits.

A spring campaign for Lay's, Frito's biggest brand, will for the first time bundle together various products under the Lay's umbrella, including Light, Stax, Kettle and Classic. The ads will feature the theme, "Get your smile on," introduced earlier this year in an ad from Omnicom Group's BBDO, New York, to tout the Cheddar & Sour Cream Lay's flavor, which conveys "the essence of Lay's [products] and the emotional connection people have with our brand," said Lora DeVuono, VP-advertising and communications, Frito-Lay North America.

Beginning this month, Frito will push hard with ads under the integrated teen-targeted theme "If not now when?" introduced earlier this year from BBDO. The campaign touts more intense flavor, color and less aftertaste for its Doritos Nacho Cheesier snacks and will include TV, radio, outdoor and Internet ads. Likewise, Tostitos Restaurant Style's improved flavor, crispier texture and less breakage will be supported with TV and print ads under the theme "Share something good" launched late last year from Omnicom's Austin, Texas-based GSD&M. Cheetos is largely being promoted via Frito's tie-in to the release this month of "Star Wars: Episode III Revenge of the Sith."

Frito this summer will launch Oberto Beef Jerky Crisps, a meat snack made with lean beef that is aimed at women. Frito will tie in to the Ladies Pro Golf Association tour and conduct extensive sampling at health clubs and outdoor events. Under its Quaker umbrella, Frito will launch Graham Cereal Bars and continue to push on the relaunched lineup of Quaker rice snacks with advertising touting the healthy snacks as a classic, not a fad. Omnicom's Element 79, Chicago, handles.

Retailers-who Ms. Levy said are requiring manufacturers to work harder and spend more for the same results these days-continue to be impressed by Frito. "They're still the giant and they carry the biggest stick," one West Coast grocery executive said.